On March 30, 2026, FERC accepted to ISO New England Inc.’s (ISO-NE) Transmission, Markets and Services Tariff (Tariff) that primarily replaces the existing Forward Capacity Market (FCM) with a prompt capacity market in which an Annual Capacity Auction (ACA) would be held approximately one month before the applicable period for which capacity is being procured (Capacity Commitment Period). FERC held that the proposed tariff revisions and prompt capacity market reforms are just and reasonable and will reduce supply and demand uncertainty. The revisions were accepted effective March 31, 2026.
ISO-NE currently procures capacity through its Forward Capacity Market (FCM) process, in which it runs annual Forward Capacity Auctions (FCA) approximately three years and four months in advance of the applicable Capacity Commitment Period. The FCA is conducted in a series of rounds until ISO-NE’s supply curve intersects with its projected demand curve. Resources may also take on or shed additional capacity supply obligations through annual and monthly capacity reconfiguration auctions.
In December 2025, after a stakeholder process, ISO-NE and the New England Power Pool Participants Committee (together with ISO-NE, Filing Parties) proposed to replace the FCM with a prompt capacity market in which ACAs would be held approximately one month before the applicable Capacity Commitment Period. Filing Parties explained that unlike under the FCM, all resources participating in the prompt capacity market must be in full commercial operation and have demonstrated their ability to deliver capacity to the region prior to the ACA. This change, Filing Parties stated, is intended to eliminate the need to administer resource-intensive annual reconfiguration auctions. Filing Parties further explained that the accepted capacity auction tariff reforms will require parties to give notice of retirement only one year before the Capacity Commitment Period in which a resource plans to deactivate, rather than the roughly four years’ advance notice required under the FCM.
FERC held that the proposed capacity auction tariff revisions are just and reasonable, noting that it has previously approved similar prompt capacity auctions in other regions. Specifically, FERC explained that the tariff revisions will reduce supply uncertainty by requiring resources to be fully commercial and to have demonstrated their ability to deliver capacity to the region to participate in ACAs and will reduce demand uncertainty because each resource’s Installed Capacity Requirement will be calculated using load forecasts developed closer in time to the relevant Capacity Commitment Period.. FERC also explained that the one-year retirement notification horizon will allow market participants to make retirement decisions based on better and more accurate information about market conditions, revenues, costs, and remaining economic life of the facilities, which should result in actual deactivation dates aligning more closely with the most economically efficient deactivation dates.
FERC’s order, issued in Docket No. ER26-925-000, is available here.